Rulemaking

Foreign Ownership Review Streamlining

11-133

This Notice of Proposed Rulemaking initiates a review of the Commission’s policies and procedures that apply to foreign ownership of common carrier radio station licensees – e.g., companies using wireless licenses to provide phone service – and of aeronautical en route and aeronautical fixed radio station licensees pursuant to section 310(b)(4) of the Communications Act of 1934, as amended. We seek to reduce to the extent possible the regulatory costs and burdens imposed on wireless common carrier and aeronautical applicants, licensees, and spectrum lessees; provide greater transparency and more predictability with respect to the Commission’s filing requirements and review process; and facilitate investment from new sources of capital, while continuing to protect important interests related to national security, law enforcement, foreign policy, and trade policy.

Wireless networks are critical components of the nation’s telecommunications infrastructure, providing mobile broadband Internet access, mobile voice and data services, and fixed telecommunications services. Foreign investment has proven to be an important source of equity financing for U.S. telecommunications companies, fostering technical innovation, economic growth, and job creation. We have issued approximately 150 section 310(b)(4) rulings authorizing foreign investment in U.S. telecommunications carriers since 1998, when we implemented the Foreign Participation Order’s “open entry” standard for foreign investors from World Trade Organization Member (“WTO”) countries. However, practical application of the foreign ownership policies adopted in the Foreign Participation Order has proven to be complex. Wireless licensees seeking Commission approval of foreign ownership under section 310(b)(4) face significant difficulties and expense in trying to ascertain their percentages of foreign ownership, whether existing or planned, from WTO Member countries as distinguished from non-WTO Member countries, as the Foreign Participation Order requires. Many section 310(b)(4) proceedings generate voluminous records consisting of highly detailed information that companies must compile as to the citizenship and principal places of business of their investors, including individuals and entities that hold de minimis interests directly or indirectly through multiple intervening investment vehicles and holding companies. Each of these cases also requires Commission staff to undertake a fact-intensive, time-consuming review of the company’s ownership information to confirm that its non-WTO ownership does not exceed 25 percent. Moreover, the information that licensees are able to provide for the record gives us only a snapshot of their foreign ownership, which reflects a licensee’s ownership at the time of the section 310(b)(4) proceeding. As a result, a licensee that has received a ruling must return to the Commission, often repeatedly, for additional approval under section 310(b)(4) before its foreign ownership can exceed the parameters of its ruling. Based on more than 13 years of experience in applying the principles of the Foreign Participation Order, we believe our section 310(b)(4) filing requirements and review process are due for reexamination to determine whether we can reduce delay, uncertainty, and expense for U.S. wireless licensees and their potential investors, including strategic joint venture partners from foreign markets, thereby reducing barriers to investment to the ultimate benefit of U.S. consumers.

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